UNITED STATES
                 SECURITIES AND EXCHANGE COMMISSION
                        Washington, DC 20549

                            FORM 10-KSB

               ANNUAL REPORT UNDER SECTION 13 OR 15(d)
               OF THE SECURITIES EXCHANGE ACT OF 1934

             FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

     Commission File Number: 001-14519

                  BALTIA AIR LINES, INC.
       (Exact name of registrant as specified in its charter)

   NEW YORK                         11-2989648
(State of Incorporation)          (IRS Employer Identification No.)

         63-25 SAUNDERS STREET, SUITE 7 I, REGO PARK, NY 11374
            (Address of principal executive offices)

Registrant's telephone number, including area code: (718) 275-5205

Securities Registered under Section 12(g) of the Exchange Act:

Common Stock - Par Value $.0001 Per Share

Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months
and (2) has been subject to such filing requirements for the past 90
days. [ ] yes [X] no

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in part III of this Form 10-KSB or any amendment to this
Form 10-KSB. [X]

Registrant has not commenced revenue operations to date. Registrant's
revenues for its fiscal year 2004: $-0-

The aggregate market value of the voting common equity held by
non-affiliates as of May 13, 2005 is $1,806,240.

As of May 16, 2005 there were 62,120,009 shares of common stock outstanding.

       DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business Disclosure Format (Check one): No [X]


PART I

Item 1. Description of Business.

The Company was organized in the State of New York, August 24,
1989.  Its objective is to provide scheduled air transportation from
the U.S. to Russia, and former Soviet Union countries. In 1991,
the Department of Transportation (DOT) granted the Company routes
to provide non-stop passenger, cargo and mail service from JFK Airport in
New York to St. Petersburg and from JFK to Riga, with online service to
Minsk, Kiev and Tbilisi, as well as back up service to Moscow.  Due to a
lack of sufficient working capital, the US Department of Transportation
terminated the Company's route authority without prejudice to
reapply when financing was in hand.  Thereafter, Baltia has engaged in
market research, operations development and planning, as well as
activities to raise the requisite funding in order to reapply with the US
Department of Transportation. These costs are borne by Baltia's shareholders
and principals.

Once fully operational, Baltia expects that it will employ approximately 200
persons full-time and be operating in compliance with all regulations
applicable to U.S. airlines.

With the exception of the JFK - Moscow route, there exists no nonstop
competitive air transportation service on the routes for which Baltia can
reapply pending financing.  Baltia intends to provide full service, i.e.
passenger, cargo and mail, and will not be dependent upon one or a few
major customers. Baltia has two registered trademarks "BALTIA" and "VOYAGER
CLASS" and five trademarks are subject to registration.

There is currently no nonstop service from JFK to St. Petersburg. Connecting
service is provided mainly by foreign carriers. Finnair, Lufthansa and SAS
are the leading competitors in the US-Russia market. KLM, British Airways,
Air France, Austrian Airlines, and Swissair also provide service. However,
foreign carriers are required to have intermediate stops at transit airports
in their respective countries (Helsinki, Frankfurt, Stockholm, Copenhagen,
etc.) because they are "third nation" airlines and as such cannot fly
directly between the US and Russia (only a US airline as well as a
reciprocating Russian airline is eligible to fly nonstop). Delta and
Aeroflot currently operate between JFK and Moscow.

Baltia's objective is to establish itself as the leading nonstop carrier in
the market niche over the North Atlantic with operations that are profitable
and growing over time. In order to accomplish this objective, we intend to
establish and maintain high quality service standards which we believe will
be competitive with the European airlines currently providing connecting
flights.  Baltia does not expect to be in direct competition with deep
discount airlines, including several East European airlines and the
offspring of the former Soviet airline Aeroflot, which also provide
connecting flights.

Baltia intends to provide First, Business, and Voyager Class accommodations.
 Baltia's passenger market strategy is tailored to particular preferences of
the various segments of its customer base, with marketing attention
particularly focused on American business travelers with interests in Russia
who require high quality, nonstop service from the US to Russia.

Baltia's initial marketing strategy is based on existing agencies
specializing in the market, selected travel and business publications,
supplemented by direct mailings to corporate travel planners, and individual
American businesses that are currently involved in Russia. Soon after the
inauguration of flight service, Baltia plans to implement its frequent flyer
program. As the marketing matures, Baltia plans to advertise to the general
public throughout the US, and in Russia.  Baltia also plans to sponsor
selected industry and trade events in the US and in St. Petersburg.

Baltia intends to provide customer service and reservations centers in New
York and in St. Petersburg, to list Baltia's schedules and tariffs in the
Official Airline Guide, and provide world wide access to reservations on
Baltia's flights through a major Computer Reservations and Ticketing System
("CRS").

The Company intends to activate the reservations service when the DOT issues
its order authorizing Baltia to sell tickets (expected to be approximately
30 to 45 days before the inaugural flight).

Baltia has identified the following market segments in the U.S.-Russia
market: (i) Business Travelers, (ii) General Tourism, (iii) Ethnic
Travelers, (iv) Special Interest Groups, (v) Professional Exchanges, and
(vi) Government and Diplomatic Travel.

Baltia believes that the direct nonstop service to be offered by it will be
superior to the stop-over service currently offered by foreign airlines.   A
comparison between the two services with respect to passenger convenience
and cargo transport efficiency is set forth below.

BALTIA - US flag, non-stop service:

With non-stop service, a passenger can fly from JFK to St. Petersburg in
about 8 hours in a Boeing B747 wide body airplane. Cargo arrives
containerized, palletized, and secure.

Foreign, stop-over journeys:

With stop-over service, it would take a passenger 10 to 18 hours to fly
through Helsinki, Copenhagen, Moscow, or Frankfurt on a foreign carrier.
In addition, passengers must change to narrow-body aircraft at a layover
airport.

Cargo is "broken up" and manually loaded onto narrow-body aircraft, or
trucked from Helsinki.

Baltia plans to operate efficiently and provide consistent high quality
service to passengers and cargo shippers alike in order to establish the
Company as the preferred airline in the market in comparison to its
competitors. The Company also plans to use targeted marketing of its service
to maintain and grow its market share.

Because of the increased reliability and comfort of a nonstop flight, Baltia
expects to capture a portion of the existing traffic.  Further, US
government traffic is required by law (Fly America Act) to fly on a US Flag
carrier when service is available.

In order to start revenue flight operations, the Company has to complete FAA
air carrier certification.  During this process the airline demonstrates to
the FAA how the airline will comply with the federal aviation regulations.
As part of the process the FAA reviews the Company's management and
operational control.

The Company's staff has prior experience with the certification and has
worked closely with the New York Flight Standards District Office (NY FSDO)
and is familiar with procedures of the Certification Standardization and
Evaluation Team (CSET). The FAA certification is a defined process, it is
structured in phases with test gates, and requires advance preparation on
the part of the carrier. The FAA assembles a certification team and the
airline assembles its certification team, acceptable to the FAA. The two
teams interact at a counterpart level. Each team has its team leaders and
managers of different functions, for example, maintenance, flight
operations, cabin safety, etc. The following table shows the basic outline
of the certification process.

Documentation Period:
Formal application documents
Manual system, checklists, aircraft airworthiness records,
  airport/enroute analyses, environmental impact analysis
Compliance statement, draft operation specifications
Training curricula
Mini-evacuation test plan
Proving flight plan
Requests for deviations and exemptions

Inspection and Demonstration Period:
Training of pilots, instructors, check airmen
Training of mechanics, instructors
Training of dispatchers
Training of flight attendants
Aircraft conformity check
Inspection of base of operations and stations JFK and St.
  Petersburg
Mini evacuation test
Proving flights

During the documentation period the FAA in essence satisfies itself that the
new air carrier has properly documented its operating procedures, that the
aircraft and its documentation meet airworthiness requirements, that
maintenance and training facilities are qualified and their curricula meets
FAA requirements. During this period the Company prepares draft Operation
Specifications, which are refined and issued upon certification.

During the inspection and demonstration stage, the FAA confirms that the
Company conducts its training in accordance with its procedures, under FAA
supervision. The FAA satisfies itself that the base station facilities at
JFK and St. Petersburg are appropriate for the proposed operations with
adequate equipment and arrangements in place. Aircraft conformity check
assures that the aircraft meets all airworthiness requirements. The mini
evacuation test demonstrates that the crew is capable of evacuating the
aircraft in emergency.  Finally, proving flights demonstrate how the Company
actually conducts its flights in accordance with its specifications and
procedures, and the test involves simulated emergencies.

The air carrier certification process includes environment impact analysis
of the airline's operations. There is no specific cost attached, and there
are no special environmental procedures in addition the airline's operations
specifications.  Standard industry operating procedures include such
environmental aspects as containment and cleaning after an accidental fuel
spill, handling of de-iceing liquid, waste disposal, etc. Also, Baltia will
have to conduct flight operations in compliance with noise abatement
regulations. Compliance with these requirements is prescribed by Federal
Aviation Regulation and is standard in the industry.  The initial compliance
cost is part of the air carrier certification.      The Company will carry
airline liability insurance as required for a US airline by DOT regulation.

During the past two years the Company has been preparing for air carrier
certification and is seeking funding to commence revenue flight operations
on the JFK   St. Petersburg route. Until the necessary funding is in place,
management is foregoing compensation and expects to contribute
administrative costs.

The Company does not engage in flight operations at this time and has made
no equipment purchases or sales. The change in aggregate financial data
during this year reflects the relatively small administrative costs that
were incurred and added to the pre-launching costs.

Baltia has arranged for a lease of a Boeing 747 aircraft from a reliable
lessor. The Company will execute the agreement when it has the financing.
The aircraft will be delivered fresh from check C, an FAA required
maintenance standard. The term "check C" refers to a mandatory, extensive
overall maintenance inspection program of an aircraft that is typically
conducted every two years. The marketing strategy relating to capacity and
overall quality of service as experienced by passengers is reflected in the
choice of aircraft.  Five aircraft types are capable of flying nonstop on
the JFK-St. Petersburg route, Boeing 747, MD11/DC10-30, Boeing 767, A340 and
Boeing 777.  From among these, Baltia's management believes that the cabin
size of a Boeing 747 aircraft offers the greatest degree of comfort and
capacity for the JFK-St. Petersburg market.  Boeing 747 dispatch reliability
lies within the 97% range (Boeing Report ID:RM 23004), which is a
contributing factor to on-time dependability. Baltia's on-time dependability
is further enhanced because a Boeing 747, a four-engine aircraft, is not
subject to ETOPS regulations which could limit flights during certain
weather conditions. "ETOPS" is an acronym for Extended Range Twin Engine
Operations, which for a startup airline generally requires that during year
one a twin engine aircraft be operated within 75 minutes from a suitable
airport. If one of the airports on the Great Circle route is unusable, a
twin engine aircraft would not receive dispatch clearance from JFK for a
flight to St. Petersburg.

With the Boeing 747 true wide body aircraft Baltia intends to provide cargo
service from the JFK to St. Petersburg, offering containers, pallets, and
block space arrangements. Baltia expects to carry contract cargo for express
shippers.  Baltia plans to market its own "Baltia Courier", "Baltia
Express", and "Baltia Priority" express service for letter and packages.
Baltia also expects revenues from diplomatic mail and cargo, under the Fly
America Act provision. This Act provides that when service is available, US
government traffic is required to fly on a US Flag carrier.

Baltia has prepared passenger service and ground service arrangements at
JFK, and similar services are available at Pulkovo Airport in St.
Petersburg, based on recent contact. As a US carrier flying into a foreign
country, Baltia will be eligible to the same degree of priority that a
foreign carrier receives when arriving in the US.

Baltia intends to start the JFK-St. Petersburg service with one round-trip
flight per week, then increase the frequency to three round trips, and then
to five round trips, within a four-month period.

By starting with one roundtrip flight per week for the first four weeks,
Baltia not only accelerates and simplifies its FAA certification, but
expects to save itself the additional time it would incur to make needed
improvements and corrections. Starting with a light schedule, any
inefficiencies of a given flight may be corrected for the next flight.
Baltia management believes that in the initial four weeks, the Company will
attain high operating efficiencies and service standards. These standards
may be further refined during the following two months when Baltia plans to
increase service to three round-trips per week. Following that, Baltia plans
to increase service to five round trips per week, and then subsequently to
daily round trip flights as additional aircraft are brought into service.
The transitional schedule allows Baltia to train additional pilots, flight
attendants, and support staff with a continuous training program. It also
allows Baltia marketing program to take effect through its various segments.

During the past two years Baltia has also been preparing standards for
service. The care taken in establishing high standards has implications
beyond the launching of the JFK-St. Petersburg flight.  Baltia plans to
build operating modules and apply that know-how to develop new markets. Once
established, Baltia plans to duplicate its JFK-St. Petersburg standards on
flights on other transatlantic routes. By the end of year one, Baltia plans
to introduce three additional aircrafts.

Additional revenues from charter flying. In conjunction with its Part 121
air carrier certification ("Part 121", referring to a Federal Aviation
Regulations' number, is an industry acronym used to describe a US airline
operating heavy jet aircraft) for scheduled service, Baltia intends to seek
certification for world wide charter service. Following certification,
Baltia plans to utilize aircraft time available between scheduled service,
to earn additional revenues from charters. We are also considering
qualifying our aircraft for military contracts.

As of December 31, 2004, Baltia has four full-time employees and five
part-time employees. Sh&E, industry consulting firm based in New York, is
Baltia's consultant. Baltia staff has professionals who have extensive major
US airline experience in aircraft maintenance, airline operations, airline
regulatory compliance and administration.

Item 2.  Description of Property.

The Company's property consists of office equipment and operations manuals.
The Company rents space for its headquarters at 63-25 Saunders Street, Suite
7I, Rego Park, New York 11374, and leases operations space at Concourse A,
Terminal 4, JFK International Airport, at monthly rents of $1,171 and $852,
respectively.  The Company believes its property is adequate to launch its
services and the Company expects to increase space within the first few
months of operations.

Baltia has two registered trademarks "BALTIA" and "VOYAGER CLASS",
registered in Jan 7, 1992 and Jan 26, 1993, respectively.

Item 3. Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

PART II.

Item 5.  Market for Common Equity and Related Stockholder Matters.

     The following table sets forth the high and low sales prices, as quoted
by the OTC-Pink Sheets, for our common stock for each quarter during our two
most recent fiscal years ended December 31, 2003 and 2004 and subsequent
thereto. These quotations reflect inter-dealers prices, without retail
mark-ups, mark-downs or commissions, and may not represent actual
transactions.

<TABLE>
<CAPTION>

      Fiscal Quarter Ended         High         Low
---------------------------   --------------- ----------------
<S>                              <C>           <C>
        March 31, 2003               .07          .04
         June 30, 2003               .15          .06
    September 30, 2003               .27          .10
     December 31, 2003               .25          .18
        March 31, 2004               .21          .10
         June 30, 2004               .18          .05
    September 30, 2004               .18          .10
     December 31, 2004               .13          .06
        March 31, 2005               .09          .05

</TABLE>


     The Company currently estimates that there are approximately 200
holders of record of its common stock. Given its continuing need to retain
any earnings to fund its future operations and desired growth, the Company
has not declared or paid, nor does it currently anticipate declaring or
paying for the foreseeable future, any dividends on the Company's common
stock.

The Company currently has no equity compensation plans, no written purchase,
savings, option, bonus, appreciation, profit sharing, thrift, incentive,
pension or similar plan or written compensation contracts.

Item 6.  Management's Discussion and Analysis or Plan of Operation.

The following discussion includes certain forward-looking statements within
the meaning of the safe harbor protections of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Statements that include words such as "believe," "expect,"
"should," intend," "may," "anticipate," "likely," "contingent," "could,"
"may," or other future-oriented statements, are forward-looking statements.
Such forward-looking statements include, but are not limited to, statements
regarding our business plans, strategies and objectives, and, in particular,
statements referring to our expectations regarding our ability to continue
as a going concern, generate increased market awareness of, and demand for,
our service, realize profitability and positive cash flow, and timely obtain
required financing. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ from anticipated
results. The forward-looking statements are based on our current
expectations and what we believe are reasonable assumptions given our
knowledge of the markets; however, our actual performance, results and
achievements could differ materially from those expressed in, or implied by,
these forward-looking statements.

Our fiscal year ends on December 31. References to a fiscal year refer to
the calendar year in which such fiscal year ends.

OVERVIEW

The Company was organized in the State of New York, August 24, 1989.  Its
objective is to provide scheduled air transportation from the U.S. to
Russia, and former Soviet Union countries. In 1991, the Department of
Transportation (DOT) granted the Company routes to provide non-stop
passenger, cargo and mail service from JFK to St. Petersburg and from JFK to
Riga, with online service to Minsk, Kiev and Tbilisi as well as back up
service to Moscow.  For lack of sufficient working capital, the US
Department of Transportation terminated the Company's route authority
without prejudice to reapply when financing was in hand.  Since such time,
Baltia has engaged in market research, operations development and planning,
as well as activities to raise requisite funding in order to reapply with
the US Department of Transportation. These costs are borne by Baltia
shareholders and principals.

With the exception of the JFK - Moscow route, there exists no nonstop
competitive air transportation service on the routes for which Baltia can
reapply pending financing.  Baltia intends to supply full service, i.e.
passenger, cargo and mail, and will not be dependent upon one or a few
major customers. Baltia has two registered trademarks "BALTIA" and
"VOYAGER CLASS" and five trademarks subject to registration.

The accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business.  The
Company's starting revenue operations is dependent upon its timely procuring
significant external debt and/or equity financing to fund its immediate and
nearer-term operations, and subsequently realizing operating cash flows from
ticket sales sufficient to sustain its longer-term operations and growth
initiatives.

PLAN OF OPERATION

We do not currently have sufficient capital to commence revenue flight
operations and must rely on additional sources of financing in order to
maintain our current level of operations. During 2004 and into 2005 we
continued to finance our operations through the issuance of our common
stock. Until revenue operations begin, our monthly expenditures for
administrative and regulatory compliance can be controlled at about
$1,500-$2,000. Based on current reserves we have sufficient capital to
support our development stage operations through the end of 2005.

In 2005 we plan to raise $1 to 1.3 mm in a private placement in order to
start revenue flight operations. Based on our prior experience with
certification and current preparations the management believes that the
launch budget, previously reviewed by the DOT, will be adequate to complete
certification and to commence flight service. Approximately $300,000 is
budgeted for aircraft, $450,000 for certification tasks, and $300,000 for
general and administrative expenses. At the time flight service is
inaugurated the company plans to have approximately 15 management and 45
staff personnel.

Management has considered the overall pipeline effect that enhances the
initial cash position of a startup carrier. It is the industry practice for
passengers to purchase tickets in advance of their flights while service
vendors bill the carrier later.

In order that a new airline would not fly empty on day one, approximately 30
days prior to the expected inaugural date the DOT authorizes sales of
tickets and cargo. Such funds from advance sales, estimated at approximately
$3 mm for the company, accumulate in an escrow account, and are released
upon the issuance of the air carrier certificate.

There can be no assurance that additional financing will be available on
terms favorable to us or at all. If adequate funds are not available or are
not available on acceptable terms, we may not be able to fund operations.


CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been
prepared in accordance with accounting principles generally
accepted in the U.S. The preparation of our financial statements
requires us to make certain estimates, judgments and assumptions
that affect the reported amounts of assets and liabilities
at the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. Our
estimates, judgments and assumptions are continually re-evaluated
based upon available information and experience. Because of the use
of estimates inherent in the financial reporting process, actual results
could differ from those estimates. Areas in which significant judgment
and estimates are used include, but are not limited to valuation of
long lives assets and deferred income taxes.

Valuation of Long-Lived Assets:  We review the recoverability of our
long-lived assets, including buildings, equipment and intangible assets,
when events or changes in circumstances occur that indicate that the
carrying value of the asset may not be recoverable. The assessment of
possible impairment is  based on our ability to recover the carrying value
of the asset  from the expected future pre-tax cash flows (undiscounted and
without interest charges) of the related operations. If these cash flows
are less than the carrying value of such asset, an impairment loss is
recognized for the difference between estimated  fair value and carrying
value. Our primary measure of fair value  is based on discounted cash flows.

The measurement of impairment requires management to make estimates of these
cash flows related  to long-lived assets, as well as other fair value
determinations.

We amortize the costs of other intangibles (excluding goodwill) over their
estimated useful lives unless such lives are deemed indefinite. Amortizable
intangible assets are tested for impairment based on undiscounted cash
flows and, if impaired, written down to fair value based on either
discounted cash  flows or appraised values.  Intangible assets with
indefinite lives are tested for impairment, at least annually, and
written down to fair value as required.

Stock-Based Compensation Plans: We account for stock-based compensation
using the intrinsic value method prescribed in Accounting Principles
Board, or APB, Opinion No. 25, "Accounting for Stock Issued to Employees,"
or APB 25, and related interpretations. Under APB 25, compensation cost
is measured as the excess, if any, of the closing market price of our
stock at the date of grant over the exercise price of the option granted.
We recognize compensation cost for stock options, if any, ratably over
the vesting period. Generally, we grant options with an exercise price
equal to the closing market price of our stock on the grant date.
Accordingly, we have not recognized any compensation expense for our
stock option grants. We provide additional pro forma disclosures as
required under SFAS No. 123, "Accounting for Stock-Based Compensation,"
or SFAS 123, as amended by SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure an Amendment of FASB Statement
No. 123," or SFAS 148, using the Black-Scholes pricing model. We charge
the value of the equity instrument to earnings and in accordance with
FASB Interpretation No. 28, "Accounting for Stock Appreciation Rights
and Other Variable Stock Option or Award Plans an interpretation of
APB Opinions No. 15 and 25."

Income Taxes: We must make certain estimates and judgments in
determining income tax expense for financial statement purposes.
These estimates and judgments occur in the calculation of certain
tax assets and liabilities, which arise from differences in the
timing of recognition of revenue and expense for tax and financial
statement purposes.

Deferred income taxes are recorded in accordance with SFAS No. 109,
"Accounting for Income Taxes," or SFAS 109. Under SFAS No. 109,
deferred tax assets and liabilities are determined based on the
differences between financial reporting and the tax basis of
assets and liabilities using the tax rates and laws in effect
when the differences are expected to reverse. SFAS 109 provides
for the recognition of deferred tax assets if realization of
such assets is more likely than not to occur.

Realization of our net deferred tax assets is dependent
upon our generating sufficient taxable income in future
years in appropriate tax jurisdictions to realize benefit
from the carry-forwards.  We have determined it more likely
than not that these timing differences will not materialize
and have provided a valuating allowance against substantially
all of our net deferred tax assets.  Management will continue
to evaluate the realizability of the deferred tax asset and
its related valuation allowance.  If our asessment of the
deferred tax assets or the corresponding valuation allowance
are to change, we would record the related adjustment to income
during the period in which we make the determination.  Our tax
rate may also vary based on our results and the mix of income
or loss in domestic and foreign tax jurisdictions in which we
operate.

In addition, the calculation of our tax liabilities involves
dealing with uncertainties in the application of complex tax
regulations. We recognize liabilities for anticipated tax audit
issues in the U.S. and other tax jurisdictions based on our estimate
of whether, and to the extent to which, additional taxes will be due.
If we ultimately determine that payment of these amounts is unnecessary,
we will reverse the liability and recognize a tax benefit during the
period in which we determine that the liability is no longer
necessary.  We will record an additional charge in our provision
for taxes in the period in which we determine that the recorded
tax liability is less than we expect the ultimate assessment to be.

RESULTS OF OPERATIONS

We had no revenues during the fiscal year ended December 31, 2004 and 2003
because we do not fly any aircraft and cannot sell tickets.

Our general and administrative expenses increased $ 236,721 to $ 324,494
during fiscal year ended December 31, 2004 as compared to $ 87,773 during
the fiscal year ended December 31, 2003. This increase is mainly the result
of increased activity in preparing for air carrier certification.

Primarily as a result of the foregoing, we incurred a net loss of $337,302
during the fiscal year ended December 31, 2004 as compared to a net loss of
$100,581 during the fiscal year ended December 31, 2003.

Our future ability to achieve profitability in any given future fiscal
period remains highly contingent upon us beginning flight operations. Our
ability to realize revenue from flight operations in any given future fiscal
period remains highly contingent upon us obtaining significant equity
infusions and/or long-term debt financing sufficient to fund leasing and
operating a Boeing 747. Even if we were to be successful in procuring such
funding, there can be no assurance that we will be successful in commencing
revenue operations or, if commenced, that such operations would be profitable.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have incurred substantial operating and net losses,
as well as negative operating cash flows. As of December 31, 2004, our
working capital was $32,352 and our stockholders' equity was $38,756. This
reflects an increase from December 31, 2003 when our working capital was
$1,732 and our stockholders' equity was $70,944. We had unrestricted cash
balance of $36,036 at December 31, 2004, as compared to $2,432 at December
31, 2003.

Our operating activities utilized $254,885 in cash during the fiscal year
ended December 31, 2004, an increase of $167,189 from the $87,696 in cash
utilized during the fiscal year ended December 31, 2003.

Our financing activities provided $238,489 and $137,712 in cash during the
fiscal year ended December 31, 2004 and 2003, respectively.

As a result of the foregoing, our unrestricted cash increased by $33,604 to
$36,036 at December 31, 2004, as compared to $2,432 at December 31, 2003.

We had no significant planned capital expenditures, budgeted or
otherwise, as of December 31, 2004.

Off-Balance Sheet Arrangements: We do not have any off-balance
sheet arrangements which have, or are reasonably likely to have,
an effect on our financial condition, financial statements,
revenues or expenses.

     Item 7. Financial Statements.

             BALTIA AIR LINES, INC.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Michael F. Cronin
Certified Public Accountant
687 Lee Road
Rochester, NY 14606

Board of Directors and Shareholders
Baltia Air Lines, Inc.
New York, NY

I have audited the accompanying balance sheet of Baltia
Air Lines, Inc. (the "Company") as of December 31, 2004
and December 31, 2003 and the related statements of
operations, stockholders' equity and cash flows for the
years then ended. The financial statements are the
responsibility of the directors. My responsibility is
to express an opinion on these financial statements based
on my audits.

I conducted my audits in accordance with auditing
standards established by the Public Company Accounting
Oversight Board. Those standards require that I plan
and perform the audits to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. The company is not required to
have, nor was I engaged to perform, an audit of its
internal control over financial reporting. My audit
included consideration of internal control over financial
reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness
of the Company's internal control over financial reporting.
Accordingly, I express no such opinion. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles
used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my
opinion.

In my opinion, the financial statements referred to
above present fairly, in all material respects, the
consolidated financial position of Baltia Air Lines, Inc.
as of December 31, 2004 and December 31, 2003 and the
results of its operations, its cash flows and changes in
stockholders' equity for the years then ended in conformity
with accounting principles generally accepted in the United
States.

The Company has incurred operating losses since inception
and does not currently have sufficient capital to commence
revenue flight operations. Note 7 of the financial
statements addresses Management's Plan regarding the
future operations of the Company.

April 17, 2005
/s/ Michael F. Cronin

Michael F. Cronin
Certified Public Accountant

April 17, 2005

<PAGE>
<TABLE>
<CAPTION>


Baltia Air Lines, Inc.
Balance Sheets
(A Development Stage Company)

                                              12/31/2004     12/31/2003
           Assets
<S>                                         <C>            <C>
Current Assets
Cash                                         $     36,036   $   2,432

Property & Equipment:
Equipment                                          60,191      60,191
Accumulated Depreciation                          (53,787)    (40,979)
  Net Property & Equipment                          6,404      19,212

Other:
Lease deposit on airplane                               0      50,000

Total Assets                                    $  42,440   $  71,644

Liabilities & Equity

Current Liabilities:
Accounts Payable                                $   3,684    $    700

Equity:
Preferred stock - 2,000,000
  authorized $0.01 par value
  66,500 issued & outstanding
  (275,250 in 2002)                                   665         665

Common Stock - 100,000,000
  authorized $0.0001 par value
  59,650,009 issued & outstanding
  (52,165,847 in 2003)                              5,965       5,217

Additional paid in capital                      8,595,914   8,291,223

Deficit Accumulated During
  Development Stage                            (8,563,788) (8,226,161)

Total Equity                                   $   38,756  $   70,944

Total Liabilities & Equity                     $   42,440  $   71,644

</TABLE>
See Summary of Significant Accounting Policies and Notes to Financial
Statements.

<PAGE>
<TABLE>
<CAPTION>
Baltia Air Lines, Inc.
Statements of Operations
(A Development Stage Company)

                                                   Years Ended             Inception to
                                            12/31/2004     12/31/2003       12/31/2004
<S>                                     <C>               <C>             <C>
Revenue                                  $            0    $          0    $          0

Costs & Expenses
 General & administrative                       324,494          87,773       6,196,006
 FAA certification costs                              0               0         206,633
 Training                                             0               0         225,637
 Depreciation                                    12,808          12,808         299,460
 Other                                                0               0         568,245
 Interest                                             0               0       1,066,659
   Total Costs & Expenses                       337,302         100,581       8,562,640

Loss before income taxes                       (337,302)       (100,581)     (8,562,640)

Income Taxes                                        325             325           1,148

Deficit Accumulated During
        Development Stage                 $    (337,627)    $  (100,906)   $ (8,563,788)

Per share amounts:
Basic:
  Loss                                              Nil             Nil
  Weighted Average                           57,938,897      49,769,573

</TABLE>
See Summary of Significant Accounting Policies and Notes to Financial
Statements.

<PAGE>
<TABLE>
<CAPTION>
Baltia Air Lines, Inc.
Statements of Cash Flows
(A Development Stage Company)

                                                         Years Ended            Inception to
                                                         12/31/2004    12/31/2003    12/31/2004
<S>                                                     <C>            <C>          <C>
Cash flows from operating activities:
Deficit Accumulated During Development Stage             $  (337,627)   $(100,906)   $ (8,563,788)
Adjustments required to reconcile deficit accumulated
  during development stage to cash used in operating
  activities:
Depreciation                                                  12,808       12,808         299,460
Expenses paid by issuance of common stock                     66,950          402         130,852
(Increase) decrease in prepaid expenses                            0            0         400,301


Increase (decrease) in accounts payable & accrued expenses     2,984            0       3,155,165
   Cash flows used by operating activities:                 (254,885)     (87,696)     (4,578,010)

Cash flows from investing activities:
Purchase of equipment                                              0            0        (309,066)
Deposit on airplane lease                                     50,000      (50,000)              0
   Cash used in investing activities                          50,000      (50,000)       (309,066)

Cash flows from financing activities:
Proceeds from issuance of common stock                       238,489      137,712       4,437,776
Proceeds from issuance of preferred stock                          0            0           2,753
Loans from related parties                                         0            0       1,351,573
Repayment of related party loans                                   0            0        (368,890)
Acquisition of treasury stock                                      0            0        (500,100)
 Cash generated by financing activities                      238,489      137,712       4,923,112

Change in cash                                                33,604           16          36,036
Cash-beginning of period                                       2,432        2,416               0
Cash-end of period                                          $ 36,036    $   2,432    $     36,036

</TABLE>
See Summary of Significant Accounting Policies and Notes to Financial
Statements

<PAGE>
<TABLE>
<CAPTION>
Baltia Air Lines, Inc.
Statements of Shareholders' Equity
(A Development Stage Company)
                                            Preferred                      Common               Deficit
                                                                                              Accumulated
                                                                        Common  Additional      During
                                                Par                     Stock     Paid-In     Development
                                      Shares   Value        Shares      Amount    Capital        Stage
<S>                               <C>       <C>      <C>           <C>       <C>            <C>
Balance at December 31, 2001         275,250 $ 2,753   48,679,757   $ 4,868   $ 8,138,593    $ 8,049,149)
Contribution of Additional Capital                                                 12,877
Net Loss                                                                                         (76,106)
Balance at December 31, 2002         275,250   2,753   48,679,757     4,868     8,151,470     (8,125,255)

Exercise of Warrants and Options                        2,934,662       293        86,906
Stock issued for cash                                     696,428        70        50,442
Stock issued for services                                (145,000)      (15)          417
Eliminated Treasury Stock Account                                                    (100)
Correct error in Preferred Stock    (208,750) (2,088)                               2,088
Net Loss                                                                                         (100,906)
Balance at December 31, 2003          66,500 $   665   52,165,847   $ 5,217   $ 8,291,223    $ (8,226,161)

Exercise of Warrants and Options                        3,771,162       377        36,082
Shares issued for cash
Shares issued for services                              4,600,000       460       201,547
Shares issued to correct previous errors                   75,000         8            (8)
Cancellation of shares issued in error                 (1,370,000)     (137)          137
Net Loss                                                                                         (337,627)

Balance at December 31, 2004          66,500     665   59,650 009     5,965     8,595,914      (8,563,788)

</TABLE>
See Summary of Significant Accounting Policies and Notes to Financial
Statements

<PAGE>
BALTIA AIR LINES, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DECEMBER 31, 2004

Basis of Presentation: The financial statements have been
presented in a "development stage" format. Since inception,
our primary activities have been raising of capital, obtaining
financing and of obtaining route authority and approval from
the DOT and the FAA. We have not commenced our principal revenue
producing activities.

Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles
requires our management to make estimates and assumptions
that affect reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statement and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from the estimates.

Cash and Cash Equivalents: For financial statement presentation
purposes, we consider those short-term, highly liquid investments
with original maturities of three months or less to be cash or
cash equivalents.

Fair Value of Financial Instruments: Statements of Financial
Accounting Standards No. 107, "Disclosures about Fair Value
of Financial Instruments," requires disclosure of fair value
information about financial instruments. Fair value estimates
discussed herein are based upon certain market assumptions and
pertinent information available to management as of December 31,
2004. The respective carrying value of certain on-balance sheet
financial instruments approximated their fair values.

These financial instruments include cash and cash equivalents,
accounts payable and accrued expenses. Fair values were assumed
to approximate carrying values for these financial instruments
since they are short-term in nature and their carrying amounts
approximate fair values or they are receivable or payable on
demand. The carrying value approximates the fair value of the
notes payable

Property and Equipment: Property and equipment are recorded at
cost. Depreciation is computed using the straight-line method
over the estimated useful lives of the assets, generally 5-7 years.
Expenditures for renewals and betterments are capitalized.
Expenditures for minor items, repairs and maintenance are charged
to operations as incurred. Gain or loss upon sale or retirement
due to obsolescence is reflected in the operating results in
the period the event takes place.

Valuation of Long-Lived Assets: We review the recoverability
of our long-lived assets, including buildings, equipment and
intangible assets, when events or changes in circumstances
occur that indicate that the carrying value of the asset may
not be recoverable. The assessment of possible impairment is
based on our ability to recover the carrying value of the asset
from the expected future pre-tax cash flows (undiscounted and
without interest charges) of the related operations.

If these cash flows are less than the carrying value of such asset, an
impairment loss is recognized for the difference between estimated
fair value and carrying value. Our primary measure of fair value
is based on discounted cash flows. The measurement of impairment
requires management to make estimates of these cash flows related
to long-lived assets, as well as other fair value determinations.

We amortize the costs of other intangibles (excluding goodwill)
over their estimated useful lives unless such lives are deemed
indefinite. Amortizable intangible assets are tested for
impairment based on undiscounted cash flows and, if impaired,
written down to fair value based on either discounted cash
flows or appraised values.  Intangible assets with indefinite
lives are tested for impairment, at least annually, and written
down to fair value as required.

Comprehensive Income: Comprehensive income is defined as changes
in the equity of an enterprise except those resulting from
shareholder transactions. The amounts shown on our consolidated
statement of stockholders' equity relate to the cumulative effect
of minimum pension liabilities, translation adjustments, and
unrealized gain or loss on securities.

Stock-Based Compensation Plans: We account for stock-based
compensation using the intrinsic value method prescribed in
Accounting Principles Board, or APB, Opinion No. 25, "Accounting
for Stock Issued to Employees," or APB 25, and related interpretations.
Under APB 25, compensation cost is measured as the excess, if any,
of the closing market price of our stock at the date of grant over
the exercise price of the option granted. We recognize compensation
cost for stock options, if any, ratably over the vesting period.
Generally, we grant options with an exercise price equal to the
closing market price of our stock on the grant date. Accordingly,
we have not recognized any compensation expense for our stock
option grants. We provide additional pro forma disclosures as
required under SFAS No. 123, "Accounting for Stock-Based
Compensation," or SFAS 123, as amended by SFAS No. 148, "Accounting
for Stock-Based Compensation-Transition and Disclosure an Amendment
of FASB Statement No. 123," or SFAS 148, using the Black-Scholes
pricing model. We charge the value of the equity instrument to
earnings and in accordance with FASB Interpretation No. 28,
"Accounting for Stock Appreciation Rights and Other Variable Stock
Option or Award Plans an interpretation of APB Opinions No. 15 and 25."

Earnings per Common Share: Basic earnings per share is computed
by dividing income available to common shareholders (the numerator)
by the weighted-average number of common shares outstanding
(the denominator) for the period. Diluted earnings per share
and outstanding common shares adjusted accordingly. It also
assumes that outstanding common shares were increased by shares
issuable upon exercise of those stock options for which market
price exceeds the exercise price, less shares which could have
been purchased by us with the related proceeds. In periods of
losses, diluted loss per share is computed on the same basis as
basic loss per share as the inclusion of any other potential
shares outstanding would be anti-dilutive.

If we had generated earnings during the year ended
December 31, 2004, we would have added 40,476,218 common
equivalent shares to the weighted average shares
outstanding to compute the diluted weighted average shares
outstanding (45,640,281 in 2003).

<TABLE>
<CAPTION>

                                               Year Ended December 31
                                                  2004         2003
<S>                                      <C>             <C>
Numerator-Net Loss                        $    (337,627)  $  (100,581)
Denominator:
Weighted average-basic                       57,938,897    49,769,573
Assumed conversion of warrants               40,276,718    45,440,781
Assumed conversion of preferred stock           199,500       199,500

Denominator-diluted                          98,415,115    95,409,854
Per share:
Net Loss-basic                                      Nil           Nil
Net Loss-diluted                                    Nil           Nil

</TABLE>

Income Taxes:  We must make certain estimates and judgments
in determining income tax expense for financial statement
purposes.  These estimates and judgments occur in the calculation
of certain tax assets and liabilities, which arise from
differences in the timing of recognition of revenue and
expense for tax and financial statement purposes.

Deferred income taxes are recorded in accordance with SFAS No. 109
"Accounting for Income Taxes." or SFAS 109.  Under SFAS No. 109,
deferred tax assets and liabilities are determined based on the
differences between financial reporting and the tax basis of assets
and liabilities using the tax rates and laws in effect when the
differences are expected to reverse.  SFAS 109 provides for the
recognition of deferred tax assets if realization of such assets
is more likely than not to occur.  Realization of our net deferred
tax assets is dependent upon our generating sufficient taxable
income in future years in appropriate tax jurisdictions to realize
benefit from the reversal of temporary differences and from net
operating loss, or NOL, carry-forwards.

We have determined it more likely than not that these
timing differences will not materialize and have provided
a valuation allowance against substantially all of our
net deferred tax asset.  Management will continue to
evaluate the realizability of the deferred tax asset
and its related valuation allowance.  If our assessment
of the deferred tax assets or the corresponding valuation
allowance were to change, we would record the related
adjustment to income during the period in which we
make the determination.  Our tax rate may also vary
based on our results and the mix of income or loss in
domestic and foreign tax jurisdictions in which we operate.

In addition, the calculation of our tax liabilities
involves dealing with uncertainties in the application
of complex tax regulations.  We recognize liabilities
for anticipated tax audit issues in the U.S. and other
tax jurisdictions based on our estimate of whether,
and to the extent to which, additional taxes will be
due.  If we ultimately determine that payment of these
amounts is unnecessary, we will reverse the liability
and recognize a tax benefit during the period in which
we determine that the liability is no longer necessary.
We will record an additional charge in our provision
for taxes in the period in which we determine that the
recorded tax liability is less than we expect the ultimate
assessment to be.

Recent Accounting Pronouncements: In December 2004, the
FASB issued SFAS No. 1223 (revised 2004) "Share-Based
Payment," or SFAS No. 234(R).  SFAS No. 123(R) revises
FASB Statement No. 123 "Accounting for Stock-Based
Compensation," and supersedes APB Opinion No.25, and
its related implementation guidance.  This Statement
eliminates the ability to account for share-based
compensation using the intrinsic value method under
APB Opinion No. 25. SFAS No. 123(R) focuses primarily
on accounting for transactions in which an entity
obtains employee services in share-based payment
transactions.  SFAS No. 123 (R) requires a public
entity to measure the cost of employee services received
in exchange for an award of equity instruments based on
the grant-date fair value of the award (with limited
exceptions).  That cost will be recognized over the period
during which an employee is required to provide service
in exchange for the award, known as the requisite service
period, which is usually the vesting period.  SFAS No.
123 (R) is effective for companies filing under Regulation
SAB as of the beginning of the first interim or annual
reporting period that begins after December 15, 2005, which
for us will be our first quarter of the year ending December
31, 2006.  We anticipate adopting SFAS No. 123(R) beginning
in the quarter ending March 31, 2006.  Accordingly, the
Provisions of SFAS No. 123(R)will apply to new awards and
to awards modified, repurchased, or cancelled after the
required effective date.

Additionally, compensation cost for the portion of awards
for which the requisite service has not been rendered that
are outstanding as of the required effective date must be
recognized as the requisite service is rendered on or
after the required effective date.  These new accounting
rules will lead to a decrease in reported earnings.
Although our adoption of SFAS No. 123(R) could have a
material impact on our financial position and results of
operations, we are still evaluating the potential impact
from adopting this statement.

In December 2003, FASB released a revised version of
Interpretation No. 46, "Consolidation of Variable Interest
Entities. ("FIN 45") called FIN 46R which clarifies certain
aspects of FIN 46.  FIN 46R only slightly modified the
variable Interest model from that contained in FIN 46 and
did change guidance in many other areas.  We adopted FIN
46 during 2003.  FIN 46R was adopted and implemented in
the first quarter of fiscal 2004 and had no impact on the
Company's financial position or results of operations.

In September 2004, the EITF reached a consensus regarding
Issue No. 04-1, "Accounting for Preexisting Relationships
Between the Parties to a Business Combination" ("EITF 04-1").
EITF 04-1 requires an acquirer in a business combination
to evaluate any preexisting relationship with the acquiree
to determine if the business combination in effect contains
a settlement of the preexisting relationship.  A business
combination between parties with a preexisting relationship
should be viewed as a multiple element transaction. EITF
04-1 is effective for business combinations after October
13, 2004, but requires goodwill resulting from prior
business combinations involving parties with a preexisting
relationship to be tested for impairment by applying the
guidance in the consensus.  We will apply EITF 04-1 to
acquisitions subsequent to the effective date and in
our future goodwill impairment testing.

In December 2004, the FASB issued SFAS No. 153, "Exchanges
of Non-monetary Assets-an amendment of APB Opinion No. 29."
which is effective for us starting July 1, 2005.  In the
past, we were frequently required to measure the value
of assets exchanged in non-monetary transactions by using
the net book value of the asset relinquished.  Under SFAS
No. 153, we will measure assets exchanged at fair value,
as long as the transaction has commercial substance and
the fair value of the assets exchanged is determinable within
reasonable limits.  A non-monetary exchange has commercial
substance if the future cash flows of the entity are expected
to change significantly as a result of the exchange. The
adoption of SFAS No. 153 is not anticipated to have a
material effect on our financial position, results of
operations or cash flows.

<PAGE>
BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004

Note 1. Organization and Operations

The Company was formed as a U.S. airline on August 24, 1989
in the State of New York. Our objective is to provide
scheduled air transportation from the U.S. to Russia, the
Baltic States and Ukraine.  In 1991, the Department of
Transportation (DOT) granted the Company routes to provide
non-stop passenger, cargo and mail service from JFK to
St. Petersburg and from JFK to Riga, with online service
to Minsk, Kiev and Tbilisi as well as back up service to
Moscow. We have two registered trademarks "BALTIA" and
"VOYAGER CLASS," and five trademarks subject to registration.
Our activities to date have been devoted principally to
raising capital, obtaining route authority and approval from
the DOT and the FAA, training crews, and conducting market
research to develop the Company's marketing strategy.

Regulatory Compliance
We intend to operate as a Part 121 carrier, a heavy jet
operator.  As such, following certification we will be
required to maintain our air carrier standards as
prescribed by DOT and FAA regulation and as specified
in the FAA approved Company manuals.  As part of its
regulatory compliance we will be required to submit
periodic reports of our operations to the DOT.

Note 2. Property and Equipment

A summary of property & equipment is as follows:

                       Estimated useful life        2004          2003

Operations manuals            5-7 years           $28,109        $28,109
Office equipment              5 years              32,082         32,082
Less accumulated depreciation                     (53,787)       (40,979)
Net                                                $6,404        $19,212
Depreciation expense                              $12,808        $12,808


Note 3. Stockholders' Equity

Description of Securities

Common Stock: We have been authorized 100,000,000
shares of Common Stock at $.0001 par value per share.
As of December 31, 2004, a total of 59,650,009 shares
of Common Stock were issued and outstanding and held
by over 100 shareholders. In addition, we have granted
warrants to issue up to 39,740,000 more shares of our
common stock. Holders of Common Stock are entitled to
receive dividends, when and if declared by the board
of directors, subject to prior rights of holders of any
Preferred Stock then outstanding and to share ratably in
the net assets of the company upon liquidation.  Holders
of Common Stock do not have preemptive or other rights to
subscribe for additional shares. The Certificate of
Incorporation does not provide for cumulative voting.
Shares of Common Stock have equal voting, dividend,
liquidation and other rights, and have no preference,
exchange or appraisal rights.

Preferred Stock:  We are authorized to issue up to a maximum
of 2 million shares (66,500 shares outstanding) of Preferred
Stock.  We can issue these shares as our board of directors
shall from time to time fix by resolution. Our Preferred Stock
is not entitled to share in any dividends declared on the Common
Stock and has no voting rights. Each share is convertible in to
3 shares of Common. The liquidation preference is set by this
conversion formula and results in a pro rata claim on the
Company's assets based upon the underlying common shares issuable
(199,500) upon conversion.

Recent Issuance of Unregistered Securities

2004:
           Stock Issued for Cash
We issued 4,600,000 shares of our common stock in exchange
for receiving a total of $202,030 in cash.  The shares are
not registered and subject to restrictions as to
transferability.

           Stock Issued for Services
We issued 408,000 shares of our common stock in exchange
for services.  The shares were valued at $66,950 or about
$0.16 per share which reflected the weighted average market
value at the time of issuance. The shares are not
registered and are subject to restrictions as to transferability.
We also issued 75,000 shares to correct a prior issuance and
cancelled 1,370,000 shares issued in error in a previous fiscal
year.

           Stock Issued Due to the Exercise of Warrants & Options
During 2004 holders of 3,771,162 warrants, registered in our
1999 registration statement, exercised their option to
acquire a like amount of shares of Common Stock. The options
were at various exercise prices and resulted in proceeds of
$36,459.

2003:
          Stock Issued for Cash
In August 2003, we issued 696,428 shares of our common stock
for a total of $50,512.  The shares are not registered
and subject to restrictions as to transferability.

           Stock Issued for Services
In 2003, we issued 10,000 shares of our common stock in
exchange for services.  The shares were valued at $402 or
$0.04 per share which approximated the market value at the
time of issuance. The shares are not registered and are
subject to restrictions as to transferability. We also
issued 20,000 shares to correct a prior issuance and
cancelled 175,000 shares issued in error in a previous
fiscal year.

          Stock Issued Due to Exercise of Warrants & Options
During 2003 holders of 2,934,662 warrants, registered in our
1999 registration statement, exercised their option to
acquire a like amount of shares of Common Stock. The options
were at various exercise prices and resulted in proceeds of
$81,200.

Summary of Warrant Activity

The following table provides summary information on the
various warrants issued by our company in private placement
transactions and unapproved equity compensation plans; the
warrants exercised to date; the warrants that are presently
exercisable and the current exercise prices of such warrants.

<TABLE>
<CAPTION>
                                          2004                           2003
                                                 Weighted                       Weighted
                                                  average                        average
                                    Shares    exercise price        Shares   exercise price
<S>                              <C>            <C>           <C>            <C>
Shares outstanding January 1        43,511,162     $0.0001        46,445,824    $0.0001
Granted during year                          0     $0.0000                 0

Exercised                           (3,771,162)    $0.0001        (2,934,662)   $0.0001
Lapsed                                       0     $0.0000                 0

Outstanding at December 31          39,740,000     $0.0001        43,511,162    $0.0001

Weighted average months remaining                  49.6                         61.6
</TABLE>

The following table summarizes the status of the
Company's aggregate stock options as of December 31, 2004:
<TABLE>
<CAPTION>
                                    Options Outstanding                   Options Exercisable
                                 weighted          Weighted average                  weighted
                             average  exercise      remaining life          average  exercise
Grantee                       Shares     price       In months              Shares    price
<S>                       <C>          <C>          <C>                <C>          <C>
Management & Directors      38,150,000   Nil(1)        49.6                      0     n/a
Other                        1,590,000   Nil           48.0              1,435,000     Nil
Total Shares                39,740,000                                   1,435,000

</TABLE>
(1) exercise price below one cent

The outstanding options of 38,150,000 granted to
management vest upon the completion of the first
revenue flight.

Note 4. Income Taxes

The Company has approximately $ 8,000,000 in net
operating loss carry-overs available to reduce
future income taxes. These carry-overs expire at
various dates through the year 2025. The Company
has adopted SFAS 109 which provides for the
recognition of a deferred tax asset based upon
the value the loss carry-forwards will have to
reduce future income taxes and management's
estimate of the probability of the realization
of these tax benefits. We have determined it
more likely than not that these timing differences
will not materialize and have provided a valuation
allowance against substantially all of our net
deferred tax asset. A summary of the deferred tax
asset presented on the accompanying balance sheets
is as follows:
<TABLE>
<CAPTION>

                                              2004          2003
<S>                                    <C>            <C>
The provision (benefit) for
income taxes consists of
the following:
  Currently payable:
     Federal                            $         0    $         0
     State                                      325            325
Total currently payable                         325            325
  Deferred:
     Federal                                106,184         50,729
     State                                   25,322          8,372
Total deferred                              131,506         59,101
Less increase in allowance                 (131,506)       (59,101)
Net deferred                                      0              0
Total income tax provision (benefit)    $       325    $       325

<CAPTION>
Individual components of deferred
taxes are as follows:

                                               2004         2003
<S>                                    <C>            <C>
Deferred tax asset arising
from net operating loss carry forwards  $ 3,335,595    $  3,204,090

Less deferred tax allowance              (3,335,595)     (3,204,090)

Net Deferred Income Taxes               $         0    $          0
</TABLE>

Utilization of federal and state NOL and tax credit
carryforwards may be subject to a substantial annual
limitation due to the ownership change limitations
provided by the Internal Revenue Code of 1986, as
amended, and similar state provisions. The annual
limitation may result in the expiration of NOL and
tax credit carryforwards before full utilization.

Note 5. Commitments and Contingencies

Facilities: The Company leases its office space for
its administrative offices, under a month to month
agreement, at a monthly rental of approximately $800.

Note 6. Supplementary Cash Flow Disclosure:

                                             2004       2003

Equity instruments issued for services:     $66,950    $ 402

Note 7. Management's Plan of Operation

We do not currently have sufficient capital to
commence revenue flight operations and must rely
on additional sources of financing in order to
maintain our current level of operations. During
2004 and into 2005 we continued to finance our
operations through the issuance of our common
stock and the continued exercise of warrants
associated with our 1999 public offering. Until
revenue operations begin, our monthly expenditures
for administrative and regulatory compliance can
be controlled at about $1,500-$2,000. Based on
current reserves we have sufficient capital to
support our development stage operations through
the end of 2005.

In 2005 we plan to raise $1 to 1.3 mm in a private
placement in order to start revenue flight operations.
Based on our prior experience with certification and
current preparations the management believes that the
launch budget, previously reviewed by the DOT, will be
adequate to complete certification and to commence flight
service. Approximately $300,000 is budgeted for aircraft,
$450,000 for certification tasks, and $300,000 for general
and administrative expenses. At the time flight service is
inaugurated the company plans to have approximately 15
management and 45 staff personnel.

Management has considered the overall pipeline effect
that enhances the initial cash position of a startup carrier.
It is the industry practice for passengers to purchase tickets
in advance of their flights while service vendors bill the
carrier later.

In order that a new airline would not fly empty on day one,
approximately 30 days prior to the expected inaugural date
the DOT authorizes sales of tickets and cargo. Such funds
from advance sales, estimated at approximately $3 mm for
the company, accumulate in an escrow account, and are released
upon the issuance of the air carrier certificate.

There can be no assurance that additional financing will
be available on terms favorable to us or at all.
If adequate funds are not available or are not available
on acceptable terms, we may not be able to fund operations.


ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 8A   CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted an
evaluation under the supervision and with the participation of our chief
executive officer and chief financial officer of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange
Act). Based upon this evaluation, our chief executive officer and chief
financial officer concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission's rules and forms. There was no change in our internal controls
or in other factors that could affect these controls during our last fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting. While existing
controls may be adequate at present, upon the commencement of flight revenue
service we intend to implement controls appropriate for airline operations.

ITEM 8B  OTHER INFORMATION.

None.


PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
          CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
          OF THE EXCHANGE ACT

MANAGEMENT

Executive Officers and Directors


The following table summarizes certain information with respect
to the executive officers and directors of the board :

Name                     Age   Position

Igor Dmitrowsky . . . .  50    President, CEO, Chairman of the Board
Walter Kaplinsky  . . .  65    Secretary
Andris Rukmanis . . . .  43    V.P. Europe and Director
Anita Schiff-Spielman    50    Director


Our directors serve until the next annual meeting and until their
successors are elected and qualified. Our officers are appointed to serve
for one year until the meeting of the board of directors following the
annual meeting of stockholders and until their successors have been elected
and qualified. There are no family relationships between any of our
directors or officers.

Igor Dmitrowsky, President and Chief Executive Officer, founded
the Company and served as Chairman of the Board from its
inception in August 24, 1989 to date. Mr. Dmitrowsky, a US
citizen, born in Riga, Latvia, attended the State University of
Latvia from 1972 to 1974 and Queens College from 1976 through 1979.
In 1979, he founded American Kefir Corporation, a dairy distribution
company, which completed a public offering in 1986, and from
which he retired in 1987.  Mr. Dmitrowsky has financed aircraft
and automotive projects, speaks fluent Latvian and Russian, and
has traveled extensively in the republics of the former Soviet
Union.  In 1990, he testified before the House Aviation
Subcommittee on the implementation of United States' aviation
authorities by US airlines.

Walter Kaplinsky, a US citizen, has been with the Company since
1990.  Mr. Kaplinsky has been corporate secretary since 1993.
In 1979, together with Mr. Dmitrowsky, Mr. Kaplinsky was one of
the co-founders of American Kefir Corporation, where from 1979
through 1982, Mr. Kaplinsky served as secretary and vice president.

Andris Rukmanis, a citizen of Latvia, is the Company's Vice
President in Europe.  Mr. Rukmanis joined the Company in 1989.
In Latvia, Mr. Rukmanis has worked as an attorney specializing in
business law.  From 1988 through 1989, he was Senior Legal Counsel
for the Town of Adazhi in Riga County, Latvia.  From 1989 to 1990,
he served as Deputy Mayor of Adazhi.

Anita Schiff-Spielman, a US citizen, serves as a director of the
board. She has been associated with the Company since its
inception in 1989.  Ms. Schiff-Spielman has owned Schiff Dental
Labs, New York, NY, for the past seventeen years.

     CODE OF ETHICS

We have not adopted a Code of Ethics that applies to all of our directors,
officers and employees, including our principal executive officer, principal
financial officer and principal accounting officer. We intend adopt a Code
of Ethics and intend to satisfy the disclosure requirement under Item 10 of
Form 8-K regarding an amendment to, or waiver from, a provision of our Code
of Ethics by filing a Current Report on Form 8-K with the SEC, disclosing
such information.

COMMITTEES OF THE BOARD OF DIRECTORS

As of December 31, 2004, we do not have any committees of our board of
directors.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT, AS AMENDED.

Based solely upon our review of copies of Forms 3, 4 and 5, and any
subsequent amendments thereto, furnished to the Company by our directors,
officers and beneficial owners of more than ten percent of our common stock,
we are not aware of any our directors, officers or beneficial owners of more
than ten percent of our common stock that, during our fiscal year ended
December 31, 2004, failed to file on a timely basis reports required by
Section 16(a) of the Securities Exchange Act of 1934.

Item 10.  Executive Compensation.

No compensation has been paid to our executive officers during the
fiscal years ended December 31, 2004, 2003 and 2002.

OPTIONS/SAR GRANTS IN THE LAST FISCAL YEAR

No individual grants of stock options, whether or not in tandem with stock
appreciation rights ("SARs") and freestanding SARs have been made to any
executive officer or any director during our fiscal year ended December 31,
2004.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES

No individual exercises of stock options, whether or not in tandem with
stock appreciation rights ("SARs") and freestanding SARs have been made by
executive officer or any director during our fiscal year ended December 31,
2004.

LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR

We had no long-term incentive plans and made no stock awards during our
fiscal year ended December 31, 2004.

EMPLOYMENT AGREEMENTS

The Company has no individual employment agreements in place with any of its
executive officers or employees.

Future Compensation of Executive Officers

The board of directors approves salaries for the Company's
executive officers as well as the Company's overall salary
structure.  For year one following the closing of financing
sufficient to commence flight operations, the rate of
compensation for the Company's executive officers is expected to be:(i)
President $186,000, (ii) Vice President Marketing $82,000,and
(iii) Vice President Europe $68,000.  To this date, the Company
has paid officers no salaries. Board directors are not presently
compensated and shall receive no compensation prior to
commencement of revenue service.

Item 11.  Security Ownership of Certain Beneficial Owners and
Management.

     As of May 16, 2005, there were 62,120,009  shares of common stock,
par value $0.0001 outstanding. The following table sets forth, as of
December 31, 2004, the ownership of the Company's Common Stock by
(i)each director and officers of the Company, (ii) all executive
officers and directors of the Company as a group, and (iii) all
other persons known to the Company to own more than 5% of the Company's
Common Stock.  Each person named in the table has or shares voting and
investment power with respect to all shares shown as beneficially
owned by such person.

<TABLE>
<CAPTION>
                               Common Shares
                            Beneficially Owned    Percent of Total Outstanding

Directors and Officers
<S>                           <C>                    <C>
Igor Dmitrowsky . . . . . .         24,422,825           40.94%
63-26 Saunders St., Suite 7I
Rego Park, NY 11374

Walter Kaplinsky  . . . . .          3,717,294            6.23%
2000 Quentin Rd.
Brooklyn, NY 11229

Andris Rukmanis . . . . . .            638,750             <FN1>
Kundzinsala, 8 Linija 9.
Riga, Latvia LV-1005

Anita Schiff-Spielman . . .             13,118             <FN1>
1149 Kensington Rd.
Teaneck, NJ 07666

Shares of all directors and         28,791,987           47.17%
executive officers as a
group (4 persons)

Beneficial owners

Steffanie J. Lewis . . . . .         5,623,331            9.43%
3511 North 13th St.
Arlington, VA 22201

</TABLE>
<FN1>
* Less than 1%
</FN>

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

None.

Item 13. EXHIBITS.

3.1 Certificate of Incorporation of Baltia Air Lines, Inc.
  (filed herewith)

3.2  Bylaws of Baltia Air Lines, Inc.

(incorporated by reference to Exhibit 3.2 to Form S-8
  filed on December 19, 2001)

31.1 Certification by Chief Executive Officer and Chief Financial Officer
pursuant to Sarbanes-Oxley Section 302, provided herewith.

32.1 Certification by Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S. C. Section 1350, provided herewith.

Item 14.     Principal Accountant Fees and Services

In 2004, the Company paid its present independent
accountant $3,000 for services in providing an audit of
the year 2003.  In 2005, the Company paid its present
independent Accountant $4,000 for services in providing
an audit of the year 2004. All other Company accounting
and tax preparations have been done in house.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                       Baltia Air Lines, Inc.


Date: 05-17-2005        _______ /s/ IGOR DMITROWSKY _______
                        By: Igor Dmitrowsky, President

Date: 05-17-2005       _______ /s/ WALTER KAPLINSKY ______
                        By: Walter Kaplinsky, Secretary

Exhibit 3.1

Certificate of Incorporation of
Baltia Air Lines, Inc.
under Section 402 of the Business Corporation Law

It is hereby certified that:

1. The name of the proposed corporation is Baltia Air Lines, Inc.

2. The purpose or purposes for which this corporation is formed, are as
follows, to wit:

To engage in any lawful act or activity for which corporations may be
organized under the Business Corporation Law. The corporation is not formed
to engage in any act or activity requiring the consent or approval of any
state official, department, board, agency or other body.

To engage in air transport and related services.

The corporation, in furtherance of its corporate purposes above set forth,
shall have all of the powers enumerated in Section 202 of the Business
Corporation Law, subject to any limitations provided in the Business
Corporation Law or any other statute of the Stat of New York.

3. The office of the corporation is to be located in the City of New York
County of Queens State of New York.

4. The aggregate number of shares which the corporation shall have the
authority to issue is one hundred million common shares ($.0001 par value)
and two million preferred shares ($.01 par value).

5. The Secretary of State is designated as agent of the corporation upon
whom process against it may be served. The post office address to which the
Secretary of State shall mail a copy of any process against the corporation
served upon him is 63-25 Saunders Street, Suite 7I, Rego Park, NY 11374.

The undersigned incorporator, or each of them if there are more than one, is
of the age of eighteen years or over.

In witness whereof, this certificate has been subscribed this 22nd day of
August 1989 by the undersigned who affirms that the statements made herein
are true under penalties of perjury.

Igor Dmitrowsky /s/
63-25 Saunders St, Ste 7I
Rego Park, NY 11374

Certificate of Incorporation of
Baltia Air Lines, Inc.
under Section 402 of the Business Corporation Law

Filed by Igor Dmitrowsky
63-25 Saunders St, Ste 7I
Rego Park, NY 11374
Tel (718) 275-5205

<PAGE>
Exhibit 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Igor Dmitrowsky, the Chief Executive Officer and Chief Financial Officer
of Baltia Air Lines, Inc., certify that:

1. I have reviewed this annual report on Form 10-KSB of Baltia Air Lines,
Inc.;

2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the small
business issuer as of, and for, the periods presented in this report;

4. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report
is being prepared;

(b) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the small business
issuer's internal control over financial reporting; and

5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's
internal control over financial reporting.

Date: May 17, 2005


          /s/ Igor Dmitrowsky
        ------------------------
        Igor Dmitrowsky
        Chief Executive Officer and Chief Financial Officer
        (principal accounting officer)

EXHIBIT 32.1

     BALTIA AIR LINES, INC.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report Baltia Air Lines, Inc. (the
"Company") on Form 10-KSB for the period ended December 31, 2004 as filed
with the Securities and Exchange Commission on the date hereof (the Report),
I, Igor Dmitrowsky, Chief Executive Officer and Chief Financial Officer
(principal accounting officer) of the Company, certify, pursuant to 18
U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been
provided to Baltia Air Lines, Inc. and will be retained by Baltia Air Lines,
Inc. and furnished to the Securities and Exchange Commission or its staff
upon request.

Date: May 17, 2005

           /s/ Igor Dmitrowsky
         ------------------------
         Igor Dmitrowsky
         Chief Executive Officer and Chief Financial Officer
         (principal accounting officer)